Inflationistas are howling about the CPI but yields at the long end of the curve are flat to slightly lower on the day.

The BLS Consumer Price Index summary shows the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis after rising 0.2 percent in April.

Details

The gasoline index increased 1.7 percent, more than offsetting declines in some of the other energy component indexes and led to a 0.9-percent rise in the energy index.

The medical care index rose 0.2 percent.

The food index was unchanged over the month.

The shelter index rose 0.3 percent in May.

The indexes for new vehicles, education and communication, and tobacco increased in May, while the indexes for household furnishing and operations, and used cars and trucks fell.

The indexes for apparel, recreation, and personal care were unchanged.

Year Over Year CPI

Year-Over-Year CPI looks like it’s on on ominous trend buts that largely due to easy comparisons and rising energy prices. Year-over-year food at home is up only 0.1%. Some will object to that, I don’t.

Food away from home rose 2.7%, likely reflecting higher wages.

The problem spot is shelter, and it’s a big one. The shelter index is up 3.5%.

Month-Over-Month CPI

Month-over-month, the CPI looks more benign but once again shelter is hot. It’s up 0.3% for the month.

Worse yet, shelter is understated in the CPI because it does not include actual housing prices.

Big Yawn

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The bond market reacted to this news with a big yawn.

Other than shelter, a big yawn is appropriate. The Fed blew another real estate bubble, junk bond bubble, and equity bubble. When those pop, deflation, not inflation will be the concern.